TO:
Board of Trustees
FROM:
Joseph Trubacz
Senior Vice President for Finance and Administration
DATE:
May 21, 2011
SUBJECT:
FY 2013 Budget
I.
BACKGROUND INFORMATION
Fiscal Year 2013 Operating Budget
Summary
The Fiscal Year 13 budget was developed in alignment with the school’s initiatives as
well as continuing to address certain core critical needs. In Fiscal Year 12 we made
significant strides in our budget to build up our tenure track faculty lines. Investments
in certain areas are necessary to continue to move forward on the strategic initiatives
and to maintain core operations.
While the revenue forecast for the state is considerably more positive than the past
few years, it is likely that we have not seen the last of budget cuts to higher
education. As we developed this budget and looked towards our five year financial
model, we managed a delicate balance of making strategic and critical investments
during a time of an uncertain financial state outlook.
Higher Education’s fiscal year 2013 allocation from the state is $513.0 million; down
only 1% from fiscal year 2012. Cuts will be limited to Fee for Service Contracts and
the school will continue to receive COF stipend payments will remain at $62 per
credit hours for undergraduate resident students. Below is a chart that depicts the
state’s level of funding higher education over the past few years:
FY 2013 Budget
1
The Colorado School of Mines’ portion of the overall budget has been approximately
3% ($482,000). Although most of the reduction will be in our Fee for Service contract,
a small decrease will apply to COF stipends due to a slight decrease anticipated for
resident undergraduate enrollment. For the fiscal year that we are just ending, fiscal
year 2012, we are being funded at a level of $16.3 million. We anticipate Mines’
allocation from the state in fiscal year 2013 will be $15.8 million; a 3% decrease from
fiscal year 2012. Because deficits are expected to continue in the state budget over
the next few years, we are running financial models that project a 20% decrease
each year in fee for service support beyond fiscal year 2013. Below is a chart that
shows state (and SFSF) funding for Mines over the past ten years and what we are
predicting for FY14:
FY 2013 Budget
2
**planned
II.
Discussion
In FY12, the school began making strides in both strategic and critical investments in
the institution after several years of making up for reduced state support. We
continue those efforts in FY13, aligning resources with the school’s strategic
objectives set forth in the strategic plan as well as investing in areas that are critical
to the operations of the institution.
The budget includes current unrestricted (education and general operation and
auxiliaries), funds that are designated for particular purposes (faculty start up and
indirect cost recoveries), restricted funds (research and CSM Foundation funds) and
the School’s endowment funds. The budget adjustments for each fund are
summarized below and the detail may be seen in Attachment 1.
FY 2013 Budget
3
Proposed Fiscal Year 2013 Budget Summary Current Unrestricted Fund
Fiscal Year 2012 Base Budget: Revenue Increases (Decrease): Tuition Revenue (Rate inc 8% Res; 5% NR) and Fees Continuing Education State Funding Indirect Cost Recoveries for Research Housing Revenue Research Other Revenue Projected Revenue Increase Expense Increases: New Academic Faculty (11 TTT; 3 mid‐year hires) Deans for Colleges (3) New Classified and Non‐Academic Staff Labor Increases ‐ Fringe Benefit Increase/ Annualization/Merit Pool/PERA 2.5% increase New Buildings Operating and Labor Resident Financial Aid and Graduate Support – SB003 Non Resident Undergraduate Financial Aid Non Resident Graduate Support Other Operating and Miscellaneous Research Expense Capital Renewal and Replacement Reserve Operating Reserve Total FY 2013 Budget Requests Net Activity FY2013 Designated Fund Restricted Fund
Endowment and Loan Funds
$ 2,600,000 10,390,000 500,000
(480,000)
600,000
1,440,000 (300,000)
$12,150,000 1,130,000 870,000
1,000,000 4,750,000 460,000 1,030,000
1,520,000 180,000 1,100,000
1,500,000
1,000,000
$14,540,000 $210,000 NA NA
640,000 2,700,000
(60,000) $580,000 $2,700,000
39,000 60,000 30,000 (80,000)
2,600,000
$130,000 $2,520,000
$450,000 ($180,000)
NA
660,000
$660,000
(140,000)
($140,000)
FY 2013 Budget
$800,000
4
Current Unrestricted Funds
After the budget adjustments summarized above, the current unrestricted budget
reflects total revenue at $149.58 million and expenses at $149.37 million resulting in
net revenue after expenses of $0.21 million.
Revenue
Current unrestricted revenues are expected to increase by $12.15 million in fiscal
year 2013. The assumptions behind the budget development follow:
 Tuition increases of 8% for resident students and 5% for non-resident
students. Assumes an incoming class of freshman and transfers of 950
students. Although overall undergraduate enrollment remains relatively flat,
the mix of students is changing with a decrease in undergraduate resident
students of 1.68% and an increase in non-resident students of 9.04%. It
also assumes and a slight growth in graduate students; 38 new students or
a 3% increase.
 Fees are expected to increase by $717,000 primarily due to the increase in
the Recreation Center fee of $55.50 per semester, resulting in revenue of
$571,000. Most other mandatory fees are increasing by CPI (3.8%) with
additional revenues at $146,000
 Continuing Education is expected to grow by $0.50 million to $3 million.
 State Funding cut of $.48 million or 3% reduction from the prior year.
 Indirect cost recoveries are expected to grow 6% or $0.60 million due to
expected increases in Research spending and an increase in the overhead
rate.
 Auxiliary Revenue is expected to increase by $1.44 million. The increases
are primarily due to the following:
o Increase in rates of ranging from 7% for traditional residence halls
and 14% increases in Weaver Towers (approximately $1 million)
o Bringing Weaver Towers back on line at 100% - $400,000
 Other revenue is expected to decrease $0.30 million due to the
discontinuance of the Graduation Fees.
Expenses
Current Unrestricted Funds (See Appendix A for detail)
Net increase to the expense budget of $14.54 million includes institute wide
increases, increases for new buildings and departmental requests.
FY 2013 Budget
5
Salaries and Benefits
Note that for the fourth year in a row, the Governor has mandated a salary freeze for
classified staff. The school matched that salary freeze across the board in fiscal year
2010 but for 2011 and 2012, the school utilized an equity, promotion, and merit pool
for academic and administrative faculty (2% and 3% respectively). The fiscal year
2013 budget proposes the use of another equity, promotion, and merit pool for
academic and administrative faculty.
This year includes a significant increase in faculty lines. We propose to hire 11 net
new faculty (after we anticipate filling faculty positions from vacancies). All are
anticipated to be tenure or tenure track faculty. We know of two faculty moving to
transitional appointments and we also expect to convert adjunct budget to 4 teaching
faculty with no budget impact. With these hires, our total budgeted faculty numbers
compared to FY07 will be:
FY07
Actual
Tenure/Tenure Track
Teaching Faculty
171
39
FY12
Budgeted
202
69
FY12
Actual
FY13
Proposed
181
58
211
73
FY14
Planned
220
73
Expense details may be reviewed in Appendix A and assumptions to note include:
 Benefit increases – Classified 5.4%; Exempt 1.5%.
 PERA –Discontinuance of 2.5% employee additional contribution ($1.37
million).
 Equity and retention pool for faculty and exempt staff – 3% (excluding
the fringe benefits calculation).
Financial Aid
The budget includes the school’s commitment under SB10-003 to convert all state
funds received pursuant to fee for service to financial aid and graduate support within
the next ten years. FY13 will be the second year of the commitment with a total
budget over $2.15 (20% of our fee for service contract) of additional institutional
financial aid and graduate support dedicated to resident students. To meet this
target, the proposed budget request includes an increase of $0.78 million
undergraduate resident financial aid and $0.19 million for graduate resident support.
In addition, the proposal includes requests for non-resident students with an
additional $1.58 million allocated to undergraduate financial aid and $.18 million for
graduate support.
Other Operating
Included in other operating expenses are nondiscretionary increases for utilities,
debt, hardware/software, payments to state agencies, RTD match for circulator and
operations for new buildings.
FY 2013 Budget
6
Designated Funds
Designated activity includes revenues derived for a specific purpose and cannot
typically be used to fund general operations. Examples include the Academic Facility
Fee designated for debt services payments, student activity fees used for student
organizations, lab fees, and funds set aside for faculty research and professional
development.
Designated Revenue is expected to increase a total of $580,000 mostly due to an
increase in fees based on inflation (3.8%) and an increase to the Health Services Fee
(41.68%) voted and approved by the students for operational and debt increases for
the new building. This revenue is offset by $60,000 contract revenue not expected to
be recurring in the next fiscal year. See Appendix A for expense detail and increases
in FTE.
Restricted Funds
Restricted Funds are restricted from outside entities and include the CSM
Foundation, and federal, state and private grants. Funds received from the CSM
Foundation are typically restricted pursuant to the instruction of the donor. Federal,
state and private funds are generally used to carry out the research mission of the
institution, but also include state and federal financial aid.
Sponsored research revenue and expense is expected to increase by 5%. It is
anticipated that support from the CSM Foundation and State Financial Aid will remain
flat.
Endowment Funds
Endowment Funds are resources invested in perpetuity and represent those
endowment funds that are owned by the School (as opposed to the CSM
Foundation) and include both restricted and unrestricted sources. The income in this
section includes investment earnings or new gifts and expenses represent spending
from the School’s endowment and the foundation fee for administering school
endowments. We are projecting investment earnings to be 5.3% of investments
based on the 10 year average experienced by the CSM Foundation.
CSM Foundation Budget
CSM receives annual funding for specific administrative operating activities outlined
below. This funding is expected to remain flat for fiscal year 2013 and those base
amounts are indicated below:
FY 2013 Budget
7
CSM Support:
Legislative Relations
Federal Legislative Services
Colorado Legislative Services
Travel - CSM Representatives
CSM Alumni Association
General CSM Support
Institutional Support
Marketing
Provost
S.V.P. Finance and Administration
V.P. Student Life
V.P. Research and Tech Transfer
CSM Services
Total CSM Support
$144,000
$108,929
$6,000
$258,929
$180,000
$398,500
$100,000
$100,000
$10,000
$10,000
$10,000
$628,500
$10,000
$1,077,429
For informational purposes, the Colorado School of Mines Foundation Budget in its
entirety is attached in Attachment 2.
III.
RECOMMENDATION
The Finance and Audit Committee recommends to the Board of Trustees for approval
the Fiscal Year 2013 Operating Budget, including:
o The Colorado School of Mines operating budget;
o The Colorado School of Mines Foundation unrestricted support for the
Colorado School of Mines.
IV.
RESOLUTION
BE IT RESOLVED that the Board of Trustees of the Colorado School of Mines
approves the Fiscal Year 2013 Operating Budget, including:
o The Colorado School of Mines operating budget;
o The Colorado School of Mines Foundation unrestricted support for the
Colorado School of Mines.
FY 2013 Budget
8
Appendix A Detail for incremental budget adjustments Current Unrestricted Fund Expenses Incremental adjustments to the current unrestricted budget are proposed as follows: Salary and Benefit increases ‐ $8.1m Financial Aid/Graduate Support increases ‐ $2.7m Operating Expense increases ‐ $1.3m Operating and Capital Reserves ‐ $2.5m Total $14.6m See detail below: Salary and Benefit increases $8.1 million: Academic Faculty: Tenure/Tenure Track Faculty – 11FTE  Chemical and Biological Engineering – 1 FTE  Civil and Environmental Engineering – 1 FTE  Electrical Engineering & Computer Science – 1 FTE  Mining Engineering – 1 FTE  Applied Mathematics & Statistics – 1 FTE  Petroleum Engineering – 2 FTE  Physics – 1 FTE  Yet to be determined – 3 FTE Assistant Track and Field Coach – 1 FTE Classified and Non‐Academic Staff: Academic Affairs Classified Positions – 4 FTE  College Deans – 3FTE  Fiscal Managers at the Colleges – 3FTE  Office of Research Administration Contracts – 1FTE  Office of Graduate Studies – 0.5 FTE Non‐Academic positions  Advisory Center – 5 FTE  Admissions Data Specialist – 1 FTE  Financial Aid Scholarship Coordinator – 1 FTE  Research Data Archivist – 0.5 FTE  Graduate Career Advisor – 1 FTE  Continuing Education Accounting Tech – 0.5 FTE  Continuing Education International Program Dir – 1 FTE  EHS position – 1FTE ($0 impact) Other Labor Increases (Fringe Benefits, Increases, Annualizations): Increase due to annualization of positions and fringe benefit increase PERA 2.5% discontinuation of employee additional contribution Promotion, Equity and Merit Pool Labor for New Buildings: Positions required for the opening of Marquez Hall  Maintenance – 7.5 FTE 1,131,456 42,848
1,231,880
724,382
$ 1,648,478
1,375,659
1,722,521
255,666
FY 2013 Budget
9
Financial Aid and Graduate Support increase of $2.7 million Financial Aid for Undergraduate Resident ‐ $781,042 Non‐resident ‐ $1,576,294 $2,357,336 Graduate Support Resident ‐ $192,165 Non‐resident ‐ $176,444 $368,609 Operating Expense of $1.3 million Utilities (including new buildings) $198,833
Hardware/Software and Tech Fee Match $38,000
Debt Service $369,776
Operating for new buildings $161,000
Other Operating Increase Net of One‐Time expenses to be funded with controlled maintenance funds and vacancy savings: Leadership Development Program ($135,000); Moving costs for Petroleum Engineering into Marquez ($50,000); Temp Employee for Capital Development and Planning ($60,000); Operating for Writing Center ($3,500); ERC Research Matching ($29,474) and Library Alliance Digital Repository contract ($25,000) $539,628
Reserves of $2.5 million Capital Renewal and Replacement Reserve $1,500,000
Operating Reserve $1,000,000
Designated Fund Expenses in the designated fund are proposed to increase by $126,616 which is comprised of: Positions funded with resources designated for specific activities $66,004
 Wellness Center Admin Assist – 0.83 FTE  Maintenance for new Building – 1 FTE Utilities and Operating for new Building $32,000
Other Operating and Debt $28,612
FY 2013 Budget 10
Attachment 2
COLORADO SCHOOL OF MINES FOUNDATION, INC.
FY'13 UNRESTRICTED REVENUE AND EXPENDITURES OPERATIONAL BUDGET PROPOSAL
FY'13
FY'12
Change from prior year
Amount
Percent
REVENUE:
Unrestricted Cash Contributions-Annual Fund
Unrestricted Cash Contributions-Bequests, trusts,etc
$2,100,000
$350,000
$1,725,000
$350,000
$200,000
$250,000
$2,464,946
$2,287,689
CSM Held Investment Fees-2%
$275,000
$280,000
($5,000)
-2%
Administration Fee on non-endowed restricted gifts
$300,000
$275,000
$25,000
9%
$0
$80,000
($80,000)
-100%
$10,798
$8,000
$2,798
35%
Unrestricted Investment Income
Endowment Management Fee
Interest on loan to CSM for student loans (paid in full FY12)
Other Sources
Campaign Reserve Endowment
Total Revenue
$0
$205,743
$5,700,744
$5,461,432
$2,913,963
$960,952
$3,874,915
$2,692,385
$911,191
$3,603,576
$569,000
$142,700
$711,700
$375,000
$0
22%
0%
($50,000)
-20%
$177,257
8%
($205,743)
-100%
$239,312
4%
EXPENDITURES:
Foundation - University Advancement
Personnel Compensation
Operations (FY13 includes add'l $50,000 for MOTM)
Foundation - Finance and Administration
Personnel Compensation
Operations
Foundation - Board of Governors
$221,578
$49,761
$271,339
8%
5%
8%
$552,200
$142,700
$694,900
$16,800
$0
$16,800
3%
0%
2%
$36,700
$38,700
($2,000)
-5%
$144,000
$108,929
$6,000
$258,929
$144,000
$107,756
$6,000
$257,756
$0
$1,173
$0
$1,173
0%
1%
0%
0%
$180,000
$0
$180,000
$180,000
$48,000
$228,000
$0
($48,000)
($48,000)
0%
-100%
-21%
$398,500
$100,000
$100,000
$10,000
$10,000
$10,000
$628,500
$398,500
$100,000
$100,000
$10,000
$10,000
$10,000
$628,500
$0
$0
$0
$0
$0
$0
$0
0%
0%
0%
0%
0%
0%
0%
$10,000
$10,000
$0
0%
$5,700,744
$5,461,432
CSM Support:
Legislative Relations
Federal Legislative Services
Colorado Legislative Services
Travel - CSM Representatives
CSM Alumni Association
General Support
Mines on the Move (MOTM moved to UA budget in FY13)
General CSM Support
CSM President's Discretionary
Marketing
Provost
S.V.P. Finance and Operations
V.P. Student Affairs
V.P. Research and Tech Transfer
CSM Services
Total Expenditures
$239,312
4%